2018 will be a transitional, intensive and risky year for the Armenian business, said the head of the Union of Employers Gagik Makaryan.
In January 2018 the new Tax Code will become effective. The Customs Code of the Eurasian Economic Union will be enforced as well. Next year the agreement with the EAEU will be enforced fully because Armenia’s “vacation” is over. Aside from the Tax Code and the EAEU Customs Code the amendments to the labor legislation will be enforced in the middle of the year. At the same time, harmonization of laws within the framework of the agreement signed with the EU will be activated. Entrepreneurs will have to deal with these changes. In addition, there will be a new government in the spring of 2018, as well as pledges of big investments in several sectors.
“Risks occur provided changes in some global laws. Will we manage to organize everything so as to help entrepreneurs to deal with this? They often lack flexibility, are unable to study changes and appear in trouble,” Makaryan says.
According to the new Tax Code, next year VAT will apply to companies with a turnover above 58.3 million drams instead of the current 115 million drams. This will cause trouble for SMEs. Gagik Makaryan says in the result of these changes only big companies will continue to pay turnover tax. Part of small businesses and medium-sized businesses will be taxed with VAT. This will generate risks as some companies will prefer dividing their businesses and their turnovers.
“The SRC needs to improve its instruments but at the same time administration should not be made tougher. In other words, SRC may produce the excuse that they will have to check more to find out if people are not hiding taxes, registering other companies. So, here is a question: does the SRC manage to heal the system to achieve transparency and prevent corruption risks,” Makaryan said. The next issue is to improve the economic situation of companies. If people shift from the turnover tax to VAT, it will increase their tax load. According to the expert, the question is whether these companies will survive and remain competitive on the market. “Of course, in a healthy climate these problems might get solved but our climate is not healthy yet,” Gagik Makaryan added.
He also touched upon the rise in prices expected in the result of enforcement of the EAEU Customs Code, noting that for now it is hard to calculate.
“The rise in price of petrol causes concerns because it may produce a multiplicative effect. Dollar and euro will remain expensive, which will trigger rise in prices. Of course, there is no hope that next year poverty will be reduced in Armenia, unemployment may decrease a bit,” the expert said.